Sources of conflict in the Franchisee-Franchisor relationship

Franchising is a highly dynamic business which involves reacting constantly to change. What makes it trickier is the fact that the reaction to change has to be unified and not individual, the franchisee and the franchisor both have to react in unison. This relationship, like any other has many potential sources of conflict and hence it is very important that this relationship is well grounded in trust and mutual respect.

Here we list down some potential sources of conflict in the relationship

• Lack of innovation Although franchising is a self-owned business, it does restrict the creativity of the franchisee. Often franchisees buy a franchise in order to be their own boss, but in a franchise system one needs to conform to practices established by the franchisor in order to maintain a common identity for the franchise. This common identity leads to conformity which is a big hindrance to creativity. It does let the franchisee innovate.

• Support This has been ranked as a topmost reason for franchisee-franchisor conflict. It is often believed that after the initial period, the quality of the franchisors support starts decreasing and this leads to discontent. This often happens because the franchisor starts concentrating on acquiring newer franchisees rather than establishing his relationship with existing franchisees. Hence the franchisor should always be in regular contact with his franchisees and he should prepare a dedicated team to ensure that his franchisees are provided adequate support.

• Fee’s The payment of fees generally leads to a lot of discontent among the franchisees. Once the franchise is established, franchisees often feel that the business has been solely built by their hard work and hence suddenly the royalty fees of the franchisor seem unfair to them. The franchisees should not forget that the franchisors support and his already established business model play a great role in the prospering of his business.

• Crankiness Constant work pressure and excess work load, leads to a lot of stress which often results in crankiness. This crankiness often results in unacceptable and hostile behaviour which can be detrimental to the interest of the business.

• Contractual Issues Also ambiguities with respect to rights and obligations can lead to conflict. These terms should be clearly stated in the contract. Contractual issues should be sorted out in the beginning itself and this in turn will be of great help in resolving a conflict.